The global objective of the research proposed here is to understand the fundamental question of how ribozyme catalysis and regulation works, and to apply this understanding to begin to engineer new catalytic properties. Our discovery of ribozymes that regulate gene expression in mammals compels us to understand how RNA structural changes enable switching from a ligated (on) state to a cleaved (off) state, and how the ribozyme's structure gives rise to catalytic activity in its biological context. Using a combination of mechanism-focused X-ray crystallography, single molecule biophysics experiments, and in vitro evolution and selection techniques, we plan to answer three sets of questions that are formulated as the three specific aims of the proposal. The hypothesis that these experiments are designed to test is that the RNA itself forms a dynamic three-dimensional structure that regulates not only its overall catalytic activity, but also regulates a switch between RNA cleavage and RNA ligation. The switch between cleavage and ligation is absolutely critical to understanding both ribozyme-mediated satellite virus replication and a new form of ribozyme-mediated mammalian gene regulation. These specific aims are formulated (1) to answer the question of how the active-site structure of the full-length, natural hammerhead ribozyme enables it to be an enzyme; (2) to understand how a single ribozyme molecule can switch between required nuclease and ligase enzyme activities; and (3) to enable us to engineer new ribozyme functionality, with the ultimate goal of creating a new generation of potentially more potent in vivo ribozyme-based therapeutic agents that target pathogenic RNAs.